Samaras: SYRIZA Win Means Bank Run

Published at11:16, Sep 17 2014

ATHENS – With his party trailing in polls, Prime Minister and New Democracy Conservative leader Antonis Samaras has warned that if his rival, austerity opponent Coalition of the Radical Left (SYRIZA) wins general elections that there would be a run on the country’s banks.

Samaras has backed big pay cuts, tax hikes, slashed pensions and worker firings on orders of international lenders, which are opposed by SYRIZA leader Alexis Tsipras, whose party had a 2.6 percent lead in the latest survey, increasing its edge even though the Premier said he has brought the country to the edge of recovery.

“Given what [SYRIZA leader] Alexis Tsipras said in Thessaloniki, if elections were held and he were to win them, there wouldn’t be a euro left in the banks the next day,” Samaras was quoted as saying during an informal conversation with conservative MPs and journalists during a visit to Parliament.

Samaras’s comments came after Tspiras, speaking at the Thessaloniki International Fair (TIF) on Sept. 13, said he would reverse austerity, restore pay cuts, slash taxes, bring pension benefits back to previous levels and rehire everyone the government fired, as well as revise the country’s debt or walk away from it.

SYRIZA said the program would cost 11.3 billion euros to implement but the figure was challenged by the Finance Ministry which said it would cost several billion euros more.

New Democracy MP Adonis Georgiadis also said Greek banks would empty if SYRIZA were to win the next election. The banks were already brought into deep difficulty when a previous government stiffed private investors and institutions with 74 percent losses.

That required a 50 billion euro recapitalization from 240 billion euros ($317 billion) in two bailouts from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).

The Finance Ministry, which is under New Democracy’s control, said the SYRIZA plan would increase the country’s deficit by 9 percent or more and leave it broke.

The ministry said, for example, that SYRIZA had failed to incorporate the 4 billion euros it would cost to increase the Public Investment Program.

The government also estimates that raising the tax-free threshold on incomes to 12,000 euros would cost 2.5 billion euros, rather than the 1.5 billion SYRIZA projects.

The government estimated that SYRIZA’s program would cost 17.2 billion euros, in contrast to the total cost of 11.4 billion announced by the leftists, Kathimerini said.

The ministry added that if SYRIZA proceeds with its plans to write off the bank debts of those living in poverty, the cost would be even greater although the government didn’t explain how people who are broke would have to pay the banks.

SYRIZA believes such a measure would result in losses of around 2 billion euros but the government puts this at closer to 10 billion.

The ministry didn’t include the 250 million euros in bad loans owed to banks by New Democracy and its coalition partner the PASOK Socialists, who aren’t paying but who want Greeks to pay their obligations while exempting themselves.

The Finance Ministry also debunked what it said was SYRIZA’s wild optimism about getting money from tax cheats, a task which the coalition has failed to do already.

The government believes that an extra 14 billion euros in revenues would be needed at a time when Greece’s borrowing costs might rise, meaning the program could increase the deficit, “leading the country back into fiscal crisis.”

SYRIZA was expected to respond to the ministry’s calculations on Sept. 17 but leftist officials have already said the government’s quick response was an indication of how worried Samaras is.

Speaking on Vima FM, SYRIZA’s chief economic policy spokesman Yiannis Dragasakis insisted that the Leftists would run a balanced budget. “We are not going to return to deficits,” he said, without explaining how, especially since walking away from the country’s debt would leave it bankrupt and unable to borrow from public or private markets.